I would like to thank Tan Sri Azman and the Malaysian Employers Federation for inviting me to deliver the keynote address for the MEF Industrial Relations Conference 2014. On behalf of the State Government of Penang, I wish you a very warm welcome and a pleasant stay.

I am also very pleased that MEF, the apex employer organisation in Malaysia, chose the city of Georgetown as the venue to host the MEF Industrial Relations Conference 2014.

The MEF membership strength of about 5,000 companies and 21 association members collectively employ a total of about 2.2 million employees. MEF is no doubt a very important stakeholder and highly relevant in its representation at various platforms of Government, the Labour and Industrial Courts, as well as training on human resources development and management, and labour legislations.

Ladies and gentlemen,
The Penang state government is working very hard at formulating and implementing people-centric policies to address socio-economic issues arising from challenges faced by a developing nation.

The implementation of economic reforms is crucial for Penang and some of the key structural challenges include infrastructure investment, increasing innovation through R&D and promoting entrepreneurship.

As a prerequisite the State must have a strong financial position. But when it comes to managing the State government and finances, the issue of corruption somehow arises.

Since 2008, the Penang state government has established a budget-based administration based on the principles of Competency, Accountability and Transparency, or in short CAT. In Penang CAT includes open competitive tenders for all public procurements and tenders, the only state government in Malaysia to have done so.

As the Chief Minister of Penang I can proudly state that all of Penang’s state elected representatives, including myself, are required to make public declaration of their assets. We also insist on full disclosure of government contracts signed with the private sector. No family members of government leaders can do business with the state government.

By implementing CAT, Penang has been able to record budget surpluses every year without increasing quit rent and assessment rates thus avoiding the risk of burdening the rakyat and the employers community. With prudent financial management, Penang’s state assets has increased by 50% from RM800 million to RM1.2 billion. We even managed to rescue the Seberang Perai Municipal Council from bankruptcy within just one year.And more importantly, we succeeded in reducing the state’s debts by 95%!

In moving forward, the Penang State government is upgrading from a budget-based administration that plugs leakages and cuts waste or inefficiencies to an outcome-based administration that stresses effectiveness and efficiencies to ensure not only value for money but that it also benefits the rakyat.

What we mean by outcome-based administration is in terms of positive impact to the stakeholders, the rakyat and businesses, who are by and large the engines of economic growth.

In Penang, we believe that economic growth alone is not enough if income inequality is not reduced through equitable distribution of wealth. In principle, reducing inequality would accelerate economic growth on a sustainable basis. Hence, Penang is not only the first state in Malaysian history to wipe out corruption, but also the first to eradicate poverty.

This was achieved by adopting the unconditional cash transfer, or UCT, model of supplementing the incomes of all families whose monthly household incomes are below the poverty line of RM790 per month.

The Penang State Government has also proposes that the minimum monthly wage be increased to RM 1,100 combined with a grace period to SMEs for 5 years from extending to foreign workers, would help to increase income for 14.2 million Malaysian workers and help economic growth by protecting Malaysian SMEs.

In the latest global workforce survey by recruitment firm Kelly Services, workers in Malaysia feel less committed to their jobs than their Asian peers. Just 28% of employees in Malaysia are totally committed to their work compared with 41% in Indonesia. The finding also shown that only 46% of Malaysian employees feel that they are being valued by the employers, Indonesia was at 58% and China at 52%. And the most prevalent reason for changing job was salary and benefits, this suggest that rewards remain a major factor in attracting and retaining talent.

The minimum wage of RM 1,100 monthly is acceptable to Small and Medium Entreprises(SMEs) provided that it does not cover foreign workers. After the 5 years grace period, SMEs have to pay the minimum monthly wage to all foreign and local workers.

We need to offer high-income jobs for Malaysians. For this objective the state government recently launched the RM 3.3 billion Business Process Outsourcing & Information Technology Outsourcing (BPO-ITO) hub to realize our potential as the one of the 31 world leading BPO hubs of the future.
We also aim to reduce relative poverty through cash aid and providing affordable home ownership. The state government has constructed 20,000 affordable housing units throughout the state and this is in addition the 20,000 units from the private sector.

Penang also attracted the most FDI in comparison to other states in Malaysia. From 2010 to August 2013, Penang managed to attract RM19.7 billion in investments, or nearly 20% of Malaysia’s total FDI of RM103 billion.

In preparing Penang for the future, we have taken the important steps of institutionalizing the fundamentals of rule of law, good and clean governance, and most importantly, integrity in leadership.

Making Penang cleaner, greener, safer and healthier will be crucial towards realizing our vision to transform Penang into an international and intelligent city.

However, I must emphasize that building and retaining human talent is of critical importance.

Penang is focused on investing in human capital through more skills training and retraining in to produce more highly-skilled workers and professionals required by industries to enhance productivity and competitiveness on a broader scale.

We recognised that the efforts and expertise provided by NGOs such as MEF, and entrepreneurship from businesses will help the Penang state to side-step the middle-income trap and provide high paying jobs.We realized that these ambitious plans ultimately hinges on our one and only resource – our human resources. In our efforts to improve our educational standards, Penang has attracted not only world-class universities but is also building Learning Centres that focuses on STEM (Science Technology English Maths) teaching to ordinary students.

Ladies and gentlemen,

I am very happy that you are all gathered here in the spirit of exchanging knowledge and know-how on good business strategies in order to remain competitive in today’s constantly changing environment.

I am sure Penang will provide the perfect setting for you to harness and appreciate all the knowledge that is being shared.

Without further ado, I wish you a fruitful conference and an enjoyable stay. It is now my pleasure to declare this MEF Industrial Relations Conference 2014 open.